Certified acreage report surprised market but not farmers

December corn futures closed 17 cents higher on the CME Thursday, only the third such gain of that magnitude in the past 14 months.

It was spurred by the release of USDA acreage data that nearly all farmers were hoping would have been revealed a long time ago and long before corn prices dropped below $5.

USDA’s report on planted acres certified to the Farm Service Agency (FSA) was the impetus for the bullish market attitude.

Back on June 19, December corn futures gained 20 cents, which was the last time there was such a healthy rise in market prices prior to the price action Thursday. Before that one must return to June of 2012 to find a close higher than Thursday.

The market began to turn when the FSA released its certified acreage report with very little ceremony and no forewarning. It indicated that farm program participants certified they had planted 88,517,566 acres of corn. While that does not imply all that was planted because not all farmers participate in farm programs, it is some distance below the 97.6 million acres that the National Agricultural Statistics Service reported Aug. 12.

Many farmers had been contending that number was too high, and ironically now have the FSA on their side. In addition to planted acreage, FSA reported 253,615 acres of corn had been planted, but had failed and would be abandoned. The significant number that had impact for the market Thursday and will have further impact for crop insurance purposes is the 3,411,358 acres that could not be planted because of weather conditions. The market was expecting the number to be between 2 and 5 million acres, but the report had a bullish impact on the market. The total planted acreage of 88.5 million compared to 93.0 million in 2012, and 88.3 million in 2011.

The following table indicates the total amount of corn and soybeans planted in the 12 Corn Belt states, along with their respective acres which were filed as prevented plant. The Corn Belt states hold 78 percent of the prevented plant corn acreage of the nation and 69 percent of the soybean acreage that could not be planted.

State

total corn

PP corn

total beans

PP beans

IL

11,495,067

201,763

9,074,274

113,007

IN

5,834,741

66,985

5,053,397

29,442

IA

13,229,626

613,257

9,106,024

106,350

KS

4,082,277

40,623

3,402,255

1,075

MI

2,147,861

17,793

1,613,681

8,774

MN

8,229,205

616,671

6,361,571

203,760

MO

3,175,345

245,420

5,385,281

59,528

NE

9,711,425

10,906

4,664,363

2,590

ND

3,397,731

498,837

4,284,768

418,046

OH

3,622,287

4,112

4,229,333

14,512

SD

5,615,093

83,945

4,236,590

82,404

WI

3,801,880

264,193

1,506,922

86,647

Total

74,342,537

2,664,504

58,918,460

1,126,134

FSA also reported Thursday that farmers had certified 72,026,052 soybean acres, which compares to the 76.4 million projected by USDA in its August Crop Report earlier in the week. Again, not all farmers participate in farm programs; subsequently FSA will not be tallying 100 percent of planted acres. The soybean acres which will not be harvested include 1,618,595 that were prevented from being planted, and another 34,505 acres which were planted but failed. The volume also shocked the market and the bullish news carried prices 19 to 26 cents higher.

Additionally, FSA reported that 49,135,264 acres of wheat were certified as planted. However, another 2,541,948 acres were certified as failed wheat acres and were not harvested. The total wheat acres prevented from being planted were 1,743,559. The wheat market in Chicago was up 7 cents on the news.

The question now is whether the grain markets can continue this bullish trend. Many grain traders are expecting corn yields to rise marginally and corn acreage to slightly erode. If the next report on Sept. 17 is anything like this one, the trend will continue.

Summary:

USDA’s report on planted acreage and prevented planting caught the market leaning the wrong way and both corn and soybean prices rose significantly. Although the trade was looking for prevented planting acres to be about what was reported, the actual planted acreage number for corn was lower than expected at 88 million.